pension reform

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pages: 344 words: 94,332

The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton, Andrew Scott

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Reform tends to be slow and as the voting population ages, it becomes increasingly resistance to pension reform. The details of reform vary considerably from country to country, but the general principles are the same: increase the retirement age so as to increase the number of years of tax paying; reduce the number of years of claiming a pension; and target pensions more to those with low incomes and assets. Across the OECD a total of eighteen countries have raised the retirement age for women, and fourteen have done so for men. However to date these increases are at a modest pace: 2.5 years for men and 4 years for women between 2010 and 2050. That is slower than the projected increase in life expectancy and so we expect this trend of pension reform to continue or accelerate. If you are a high earner, it is also important to realize that the state will play a smaller role in your pension provision going forward.

If you are a high earner, it is also important to realize that the state will play a smaller role in your pension provision going forward. For example, in 2000 a wealthy UK pensioner could expect a state pension worth more than 35 per cent of their final salary; by 2060 that will be only 20 per cent. If state pension reform is slow, changes in corporations’ occupational schemes have, in contrast, been rapid. Pensions are expensive to run and not something most firms are good at, and increasing longevity has made company pension schemes a major financial liability. The result is a dramatic decline in the number of such schemes, while existing schemes are already closing their membership to new workers. In 1987 in the UK, for example, there were 8.1 million members attached to occupational pension schemes in the private sector; by 2011 that number had fallen to 2.9 million.7 In the US, the number of employees with access to defined benefit pensions declined from 62 per cent in 1983 to 17 per cent by 2013.8 Furthermore, even among those schemes that survive, many are reducing their generosity in order to achieve financial sustainability.

Jimmy: The three-stage life is stretched We now turn our attention to Jimmy, who was born in 1971 and has a life expectancy of 85.9 We are investigating the finances behind a three-stage life, so we assume that Jimmy graduated from college aged 21 in 1992 and intends to work until he reaches the age of 65 in 2036. Like Jack, he wants to achieve a pension worth 50 per cent of his final salary. However, we will make one key change for Jimmy: our calculations are based on the assumption that he does not have access to a company pension scheme. Despite the state pension reforms we mentioned above, we will continue to assume that he receives a state pension worth 10 per cent of his final salary. Figure 2.3 shows the financing requirements for Jimmy. Whereas Jack had to save 4.3 per cent of his income every year to retire at 65, Jimmy has to save 17.2 per cent each year. Balancing is much trickier for Jimmy. He doesn’t have the benefit of a company pension and so he has to finance twice as much of his pension, and, unlike Jack, he works for forty-four years and retires for twenty.


pages: 471 words: 124,585

The Ascent of Money: A Financial History of the World by Niall Ferguson

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Admiral Zheng, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collateralized debt obligation, colonial exploitation, Corn Laws, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, German hyperinflation, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, interest rate swap, Isaac Newton, iterative process, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour mobility, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Naomi Klein, Nick Leeson, Northern Rock, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, structural adjustment programs, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, too big to fail, transaction costs, value at risk, Washington Consensus, Yom Kippur War

., p. 55. 63 José Piñera, ‘Empowering Workers: The Privatization of Social Security in Chile’, Cato Journal, 15, 2-3 (Fall / Winter 1995/96), pp. 155-166. 64 Ibid., p. 40. 65 Teresita Ramos, ‘Chile: The Latin American Tiger?’, Harvard Business School Case 9-798-092 (21 March 1999), p. 6. 66 Laurence J. Kotlikoff, ‘Pension Reform as the Triumph of Form over Substance’, Economists’ Voice (January 2008), pp. 1-5. 67 Armando Barrientos, ‘Pension Reform and Pension Coverage in Chile: Lessons for Other Countries’, Bulletin of Latin American Research, 15, 3 (1996), p. 312. 68 ‘Destitute No More’, Economist, 16 August 2007. 69 Barrientos, ‘Pension Reform’, pp. 309f. See also Raul Madrid, ‘The Politics and Economics of Pension Privatization in Latin America’, Latin American Research Review, 37, 2 (2002), pp. 159-82. 70 All figures are for 2004, the latest comparative data available from the World Bank’s World Development Indicators database. 71 I am indebted here to Laurence J.

In 1980, just seven years after the coup, Pinochet conceded a new constitution that prescribed a ten-year transition back to democracy. In 1990, having lost a referendum on his leadership, he stepped down as president (though he remained in charge of the army for a further eight years). Democracy was restored, and by that time the economic miracle was under way that helped to ensure its survival. For the pension reform not only created a new class of property-owners, each with his own retirement nest egg. It also gave the Chilean economy a massive shot in the arm, since the effect was significantly to increase the savings rate (to 30 per cent of GDP by 1989, the highest in Latin America). Initially, a cap was imposed that prevented the AFPs from investing more than 6 per cent (later 12 per cent) of the new pension funds outside Chile.65 The effect of this was to ensure that Chile’s new source of savings was channelled into the country’s own economic development.

The growth rate in the fifteen years before Friedman’s visit was 0.17 per cent. In the fifteen years that followed, it was 3.28 per cent, nearly twenty times higher. The poverty rate has declined dramatically to just 15 per cent, compared with 40 per cent in the rest of Latin America.68 Santiago today is the shining city of the Andes, easily the continent’s most prosperous and attractive city. It is a sign of Chile’s success that the country’s pension reforms have been imitated all across the continent, and indeed around the world. Bolivia, El Salvador and Mexico copied the Chilean scheme to the letter. Peru and Colombia introduced private pensions as an alternative to the state system.69 Kazakhstan, too, has followed the Chilean example. Even British MPs have beaten a path from Westminster to Piñera’s door. The irony is that the Chilean reform was far more radical than anything that has been attempted in the United States, the heartland of free market economics.


pages: 471 words: 109,267

The Verdict: Did Labour Change Britain? by Polly Toynbee, David Walker

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banking crisis, Big bang: deregulation of the City of London, call centre, central bank independence, congestion charging, Corn Laws, Credit Default Swap, decarbonisation, deglobalization, deindustrialization, Etonian, failed state, first-past-the-post, Frank Gehry, gender pay gap, Gini coefficient, high net worth, hiring and firing, illegal immigration, income inequality, knowledge economy, labour market flexibility, market bubble, millennium bug, North Sea oil, Northern Rock, offshore financial centre, pension reform, Plutocrats, plutocrats, Ponzi scheme, profit maximization, purchasing power parity, shareholder value, Skype, smart meter, stem cell, The Spirit Level, too big to fail, University of East Anglia, working-age population, Y2K

Private pensions were then the rage, for those who could afford them; others assumed their company schemes would provide; for the rest, the state minimum. Labour presided over an awakening. Occupational schemes had miscalculated the length of time they would have to pay out to pensioners surviving for longer and longer. Private pensions had been mis-sold, both literally to those induced to opt out of the state schemes and figuratively to those who had believed the patter about them paying off. In a parallel universe, pension reform might have been Labour’s forte. All pensions systems ultimately had to be social democratic; even the most ironclad free marketeer had to accept the need for state provision and tight regulation. But if reforms were to last, a measure of bipartisanship was needed. Things started badly when Labour were accused of damaging private pension funds in 1997 by adjusting a tax break on corporation tax.

With hindsight it probably was mildly damaging, but the funds’ rhetoric was overblown. So, too, were persistent allegations that pension entitlements being racked up by public-sector staff were over-generous. But the state was accumulating hundreds of billions in liabilities and the government obfuscated when it might have fought prejudice with facts about the relative remuneration enjoyed in public and private sectors and the small average size of public-sector pensions. Reforms were needed but Labour went AWOL. The biggest question confronting an ageing society was similar to that posed by Sir Nicholas Stern over climate change: how much would people cut consumption in the here and now for the sake of tomorrow? It was not one likely to be tackled by a government that believed its political fate depended on keeping the fires burning. The choice was either to save more now or extend working lives.

It was not compulsory to join the scheme – but it was reckoned inertia would ensure few people would opt out. The age of retirement would probably need to keep rising faster, with a review every four years to make sure pensions were keeping up with life expectancy. Later on, Labour tried to inject more equity into pensions by stopping the tax deductibility of pension contributions for those on higher earnings from 2011. Labour’s principal pension reforms were meant to address inequality. They introduced a future pension entitlement aimed at carers, disabled people and the low paid who had failed to accrue regular National Insurance pension rights. As many as twenty million people could gain extra post-retirement income in future if this reform were to stick. The Blair–Brown rivalry played out over pensions policy. If Tweedledum could win praise over child poverty, Tweedledee determined to earn his by promising to end poverty among pensioners.


pages: 376 words: 109,092

Paper Promises by Philip Coggan

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The pension burden can also be cut by reducing the extent of inflation-linking. Britain has already made this move, announcing that public-sector pensions will increase in line with the consumer price index, rather than the retail price index. The former tends to rise by around 0.7 per cent a year less than the latter. This change may reduce the government’s pension bill by 10 per cent or so. Indeed the proposed British pension reforms for the public sector involved a combination of different measures – as well as a change in inflation-linking, the government also planned to make public-sector workers retire at the state pension age (rather than at sixty), switch them to career-average schemes and increase the level of their contributions. This quadruple whammy prompted a strike in late June 2011 and further disputes looked inevitable.

Mohanty and Fabrizio Zampolli, ‘The Future of Public Debt: Prospects and Implications’, Bank for International Settlements, Working Papers 300. 21 Quoted in Arnaud Mares, ‘Ask Not Whether Governments Will Default, But How’, Morgan Stanley research note, 20 September 2010. 22 Irving Fisher, ‘The Debt-Deflation Theory of Great Depressions’, Econometrica , 1 (4), 1933. 23 Reinhart and Rogoff, in ‘Ask Not Whether Governments Will Default’. 24 For a sweeping critique, see John Irons and Josh Bivens, ‘Government Debt and Economic Growth: Overreaching Claims of Debt “Threshold” Suffer from Theoretical and Empirical Flaws’, Economic Policy Institute briefing paper no. 271, July 2010. 25 Antonio Afonso and Davide Furceri, ‘Government Size, Composition, Volatility and Economic Growth’, School of Economics and Management, Technical University of Lisbon, working paper ISSN 0874-4548, January 2008. 11 . BEQUEATHING OUR DEBTS 1 ‘Global Demographics – From Golden to Grey, Long-Term Asset Return Study’, Deutsche Bank, 10 September 2010. 2 Quoted in David Willetts, The Pinch: How the Baby Boomers Took Their Children’s Future – And Why They Should Give it Back, London, 2010. 3 Ibid. 4 Martin Neil Baily and Jacob Funk Kirkegaard, ‘US Pensions Reform: Lessons from Other Countries’, Peterson Institute for International Economics, 2009. 5 ‘Global Demographics’. 6 ‘Global Aging 2010: An Irreversible Truth’. 7 Eileen Norcross and Andrew Biggs, ‘The Crisis in Public Sector Pension Plans: A Blueprint for Reform in New Jersey’, http:://mercatus.org/pensions. 8 Robert Novy-Marx and Joshua Rauh, ‘Public Pension Promises: How Big Are They and What Are They Worth?’

., 2010. 11 A long-standing deal has seen Americans head the World Bank and Europeans the IMF. 12 Carmen Reinhart and Belen Sbrancia, ‘The Liquidation of Government Debt’, NBER Working Paper 16893, March 2011. 13 Russell Napier, ‘Bretton Woods on Speed’, CLSA research note, November 2010. Bibliography Some suggestions for further reading: Acharya, Viral and Richardson, Matthew, eds, Restoring Financial Stability: How to Repair a Failed Financial System, New York, 2009. Ahamed, Liaquat, Lords of Finance: 1929, the Great Depression and the Bankers Who Broke the World, London, 2009. Baily, Martin Neil and Kirkegaard, Jacob Funk, US Pension Reform: Lessons from Other Countries, Washington, DC, 2009. Barbera, Robert J., The Cost of Capitalism: Understanding Market Mayhem and Stabilizing Our Economic Future, New York, 2009. Belloc, Hilaire, Usury, London, 1931. Bernholz, Peter, Monetary Regimes and Inflation: History, Economic and Political Relationships, Cheltenham, 2003. Bootle, Roger, The Death of Inflation: Surviving and Thriving in the Zero Era, London, 1996.


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

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The shift to the defined-contribution scheme affected the take-home salaries of civil servants without creating an uproar—an unimaginable political win. But once the government changed after the unexpected election rout of the NDA government in May, the progress toward the pension reform came to a standstill. While it got Chidambaram’s support, he was bent on getting legislation introducing the pension regulator through parliament, which stalled when the left parties opposed it. Chidambaram waited and finally, in exasperation at two and a half years of stalling, decided to start work on the scheme without legislation. The opponents of the bill have been furious with the finance minister ever since and have labeled it “Chidambaram’s pension reform,” implying that he is working on it without the parliament’s aye. With all the committee meetings and changes in government, Gautam says, “The NPS reforms have got delayed by a decade.”

“There was a familiar tendency among company management to make long-term promises they did not have to fulfill personally,” Marty says. “They made these promises without an idea where their revenues would stand. In some ways, these disasters were inevitable.” Our great, big growth advantage As Surendra Dave notes, one of the first things the Indian economists in the committee working on pension reforms did was study the failure of these social security systems in the West. India, in shaping a universal social insurance scheme so late in the game, had a great opportunity to survey the disasters gone past and frame a better policy. At the very least, the challenges developed markets are facing around pensions and social security tell us “what not to do”—which mechanisms, for example, trigger health carelessness, low savings and high future taxes.

In 2004 the Indian government, with the Sensex at 5,000 points, proposed that 10 percent of pension funds be pumped into equities. We entered 2008 with the stock market having risen more than three times that, but with the shift yet to be made. Even after its steep falls in September 2008, a fund that had invested money in 2004 would have turned in good returns. The stock market is expected to touch $5 trillion by 2020, and we are still stalling. A BIG CHALLENGE to pension reforms and a sustainable social security policy is the danger of politics creeping in. What our experiences and those of developed markets make clear is that a universal scheme, to be effective and sustainable, must be insulated from political compulsions as much as possible. Otherwise, long-term funds become easy prey for election-minded governments and end up getting tweaked and changed and overhauled, especially in times of low growth.


pages: 900 words: 241,741

Total Recall: My Unbelievably True Life Story by Arnold Schwarzenegger, Peter Petre

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Berlin Wall, California gold rush, call centre, clean water, cleantech, Donald Trump, financial independence, Golden Gate Park, illegal immigration, index card, Maui Hawaii, Mikhail Gorbachev, oil shale / tar sands, pension reform, risk tolerance, rolodex, Ronald Reagan, Saturday Night Live, Silicon Valley, stem cell, Y2K

Teachers, firefighters, and cops quickly joined the nurses protesting at my public appearances. Every time I arrived at an event, they’d be out there, waving signs, booing, chanting, and ringing cowbells. The unions formed coalitions with names like the Alliance for a Better California and started pouring millions of dollars into TV and radio ads. One commercial featured a firefighter who was convinced that my pension reforms would take away benefits to widows and orphans. Another showed teachers and PTA members saying how disappointed they were with me for trying to put California’s budget troubles on the backs of the kids. The heat of the protests surprised me, but the reforms were too important to give up. My spokesman told the press, “Our door will be open twenty-four hours a day to any Democrat who is serious about negotiating.

I coaxed legislative leaders of both parties to go along with me, and they all paid a price. The Democrats, senate leader Darrell Steinberg and assembly speaker Karen Bass, made themselves wildly unpopular with the liberals by agreeing to support open primary elections as well as even more welfare reforms—removing things like automatic cost of living increases. They enraged the public-employee unions by agreeing both to pension reform and to another condition I insisted on: the creation (at last!) of a strict rainy-day fund that could be used only in a true emergency. The Republican leaders paid an even higher price. The party stripped State Senator Dave Cogdill of his leadership position the night of the vote and forced Mike Villines, the assembly Republican leader, out of his post a few weeks later—all because they had accepted a compromise that included a tax increase.

I was disappointed when I learned that my successor, Governor Jerry Brown, signed a bill to remove those reforms from the 2012 ballot at the behest of Democrats and labor unions. The polls had shown it headed for a landslide victory this time, with 84 percent planning to vote yes, according to the reform group the Think Long Committee for California. In the end, politics as usual produced a tax increase with no real safeguards to restrict further spending. And now the budget reform initiative will not be voted on until 2014. In the fall, I signed a historic pension reform that rolled back some of the worst excesses threatening to bankrupt the state. By cutting a lot of red tape, we issued permits for so many solar power plants in California—more than 5,000 megawatts in 2009 alone (one hundred times all the solar permitted in the United States a year earlier)—that California was being called the Saudi Arabia of Solar. California is now on track to build not just the most but also the largest solar projects in the world.


pages: 304 words: 22,886

Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler, Cass R. Sunstein

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Al Roth, Albert Einstein, asset allocation, availability heuristic, call centre, Cass Sunstein, choice architecture, continuous integration, Daniel Kahneman / Amos Tversky, desegregation, diversification, diversified portfolio, endowment effect, equity premium, feminist movement, framing effect, full employment, George Akerlof, index fund, invisible hand, late fees, libertarian paternalism, loss aversion, Mahatma Gandhi, Mason jar, medical malpractice, medical residency, mental accounting, meta analysis, meta-analysis, Milgram experiment, pension reform, presumed consent, profit maximization, rent-seeking, Richard Thaler, risk tolerance, Robert Shiller, Robert Shiller, Saturday Night Live, school choice, school vouchers, transaction costs, Vanguard fund, Zipcar

“Strategy Fads and Strategic Positioning: An Empirical Test for Herd Behavior in Prime-Time Television Programming.” Journal of Industrial Economics 50 (2002): 57–84. Kessler, Daniel, and Mark McClellan. “Do Doctors Practice Defensive Medicine?” Quarterly Journal of Economics 111 (1996): 353–90. Ketchum, Christopher. “Enron’s Human Toll.” Salon.com, January 23, 2002. http://archive.salon.com/tech/feature/2002/01/23/enron_toll/index1.html. Klevmarken, N. Anders, “Swedish Pension Reforms in the 1990s.” April 2002. http://www.nek.uu.se/Pdf/wp2002_6.pdf. Kling, Jeffrey, Sendhil Mullainathan, Eldar Shafir, Lee Vermeulen, and Marian Wrobel. “Choosing Well: The Case of Medicare Drug Plans.” Working paper, Harvard University, August 2007. Koehler, Jay, and Caryn Conley. “The ‘Hot Hand’ Myth in Professional Basketball.” Journal of Sport and Exercise Psychology 25 (2003): 253–59. Koppell, Jonathan G.

Michigan Journal of Gender and Law 10 (2003): 169–88. Nordhaus, William D. “The Stern Review on the Economics of Climate Change.” Journal of Economic Literature 45 (2007): 686–702. BIBLIOGRAPHY Nordhaus, William D., and Joseph Boyer. Warming the World: Economic Models of Global Warming. Cambridge: MIT Press, 2000. Norman, Donald. The Design of Everyday Things. Sydney: Currency, 1990. Normann, Goran, and Daniel J. Mitchell. “Pension Reform in Sweden: Lessons for American Policymakers.” Heritage Foundation Backgrounder no. 1381, 2000. http://www.heritage.org/Research/SocialSecurity/bg1381.cfm. O’Donoghue, Ted, and Matthew Rabin. “Doing It Now or Later.” American Economic Review 89, no. 1 (1999): 103–24. ———. “Studying Optimal Paternalism, Illustrated by a Model of Sin Taxes.” American Economic Review 93, no. 2 (2003): 186–91. Okin, Susan Moller.


pages: 261 words: 103,244

Economists and the Powerful by Norbert Haring, Norbert H. Ring, Niall Douglas

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accounting loophole / creative accounting, Affordable Care Act / Obamacare, Albert Einstein, asset allocation, bank run, barriers to entry, Basel III, Bernie Madoff, British Empire, central bank independence, collective bargaining, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, diversified portfolio, financial deregulation, George Akerlof, illegal immigration, income inequality, inflation targeting, Jean Tirole, job satisfaction, Joseph Schumpeter, knowledge worker, labour market flexibility, law of one price, Long Term Capital Management, low skilled workers, market bubble, market clearing, market fundamentalism, means of production, minimum wage unemployment, moral hazard, new economy, obamacare, open economy, pension reform, Ponzi scheme, price stability, principal–agent problem, profit maximization, purchasing power parity, Renaissance Technologies, rolodex, Sergey Aleynikov, shareholder value, short selling, Steve Jobs, The Chicago School, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, ultimatum game, union organizing, working-age population, World Values Survey

As a minimum, they would need to be strictly prohibited from doing private business with or taking favors from investment managers. There are plenty of examples from other countries to copy: the US individual retirement account system is based on the Chilean pension reform of 1980/81 that in turn was based heavily on proposals made in the book Capitalism and Freedom by Milton Friedman. In response to the Chilean system facing a likely collapse in a few decades time, it was substantially overhauled in 2008 to require mandatory participation of all citizens in exchange for universal pension coverage. Another example is that of Sweden, which enacted a series of very famous pension reforms in 58 ECONOMISTS AND THE POWERFUL 1998 followed by refinements in 2010 – there an individual’s personal retirement account defaults to an age-determined mix of an equity index tracking fund and a fixed income fund, but that can be switched at any time into any other investment by its owner.


pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

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Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, Berlin Wall, British Empire, capital controls, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, Ford paid five dollars a day, full employment, George Akerlof, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, new economy, New Urbanism, pension reform, Peter Singer: altruism, pets.com, placebo effect, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, women in the workforce, World Values Survey, Yom Kippur War, young professional

The reason for America’s prolificacy could also be that pensions in the United States are particularly stingy, making kids more useful as old-age insurance. A typical worker in the United States receives as little as 40 percent of his or her last wages from Social Security. European pensions are more generous. In Italy, fertility started rising slowly in 1996 after plummeting for ages. Perhaps not coincidentally, that was the year in which pension reform kicked in, reducing the payments promised to younger workers from 80 percent of their last wage to only 65 percent. Indeed, economists found that the odds of having a kid rose 10 percent for those workers who had their pensions cut, relative to those who hadn’t. But the most convincing explanation seems to be that the United States has been better at accommodating work and childbearing than other nations.

storyId=102005062&ft=1&f=1001, accessed 07/18/2010). Data on government pension replacement rates and their impact on fertility comes from Olivia S. Mitchell and John W. R. Phillips, “Social Security Replacement Rates for Alternative Earnings Benchmarks,” University of Michigan Retirement Research Center Working Paper, May 2006; and Francesco C. Billari and Vincenzo Galasso, “What Explains Fertility? Evidence from Italian Pension Reforms,” CEPR Discussion Paper, October 2008. Arguments about work’s impact on fertility in Europe are drawn from Bruce Sacerdote and James Feyrer, “Will the Stork Return to Europe and Japan? Understanding Fertility Within Developed Nations,” NBER Working Paper, June 2008; and Samuel Preston and Caroline Sten Hartnett, op. cit. Evidence of the financial benefits of marriage is found in Martin Browning, Pierre-André Chiappori, and Arthur Lewbel, “Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power,” Economics Series Working Paper, Oxford University Department of Economics, August 2006; Graziella Bertocchi and Marianna Brunetti, “Marriage and Other Risky Assets: A Portfolio Approach,” CEPR Discussion Paper, February 2009; Libertad González and Berkay Özcan, “The Risk of Divorce and Household Saving Behavior,” IZA Working Paper, September 2008.


pages: 368 words: 32,950

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile by Alexander Davidson

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accounting loophole / creative accounting, algorithmic trading, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Big bang: deregulation of the City of London, capital asset pricing model, central bank independence, corporate governance, Credit Default Swap, dematerialisation, discounted cash flows, diversified portfolio, double entry bookkeeping, Edward Lloyd's coffeehouse, Elliott wave, Exxon Valdez, forensic accounting, global reserve currency, high net worth, index fund, inflation targeting, interest rate derivative, interest rate swap, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, Nick Leeson, North Sea oil, Northern Rock, pension reform, Piper Alpha, price stability, purchasing power parity, Real Time Gross Settlement, reserve currency, shareholder value, short selling, The Wealth of Nations by Adam Smith, transaction costs, value at risk, yield curve, zero-coupon bond

In this book, we will try to see whether it lives up to its claim, and how well it will stand a market downturn. I will explain how the London insurance market, including Lloyd’s, works. There is a new chapter on reinsurance, which covers the impact of catastrophes such as Hurricane Katrina in 2005, and how insurers have started to tap capital markets for extra reinsurance capacity. In personal finance, we will take a critical look at pension reform, and controversies related to sales of payment protection insurance. We look at current thinking on mortgages. Elsewhere, we compare types of pooled investment. Since the first edition was published, regulation and corporate governance have evolved, and this book covers how they work today. We focus on the role of the Financial Services Authority and the development of its principles-based regulatory regime, which is not always helped by the onset of EU financial services legislation.

As an employee, you are included in the state second pension, unless you contract out, which is to give up the entitlement and build up a sum instead in your own pension fund. HM Revenue and Customs rebate part of your National Insurance contributions into your personal pension. You are free to contract back in. State pension package The Pensions Act 2007, which received Royal Assent in July 2007, is mainly about state pension reform. It has three strands. People will receive the state pension later than before. This will be on a phased basis. In 2024–26, they will start taking the pension at the age of 65–66, and in 2034–36, they will start at the age of 66–67. In 2044–46, they will take it at the age of 67–68 years. The basic state pension rises every year with the Retail Prices Index. From 2012 or slightly later, it will rise instead by earnings, which should make the pension more generous.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

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accounting loophole / creative accounting, Airbnb, Ben Bernanke: helicopter money, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, market bubble, means of production, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, Plutocrats, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, winner-take-all economy, Wolfgang Streeck

However, while this should make them interested in states being, if not debt-free, then reliably able to fulfil their obligations to their creditors, it may also mean that they have to pay for their government’s liquidity in the form of deep cuts in public benefits and services on which they also in part depend. However complicated the cross-cutting cleavages in the emerging international politics of public debt, the price for financial stabilization is likely to be paid by those other than the owners of money, or at least of real money. For example, public pension reform will be accelerated by fiscal pressures; and to the extent that governments default anywhere in the world, private pensions will be hit as well. The average citizen will pay – for the consolidation of public finances, the bankruptcy of foreign states, the rising rates of interest on the public debt and, if necessary, for another rescue of national and international banks – with his or her private savings, cuts in public entitlements, reduced public services and higher taxation.

This process is expected to continue, assisted by deep changes in political-economic institutions which, for example, prevent the central bank from accommodating an expansionary fiscal policy: The medium-term financial forecast of the Swedish government for the years 2013–2015 projected surpluses of up to three percent of GDP … The estimated annual surplus is up to three percent of GDP. The improvement of the budget balance would be achieved solely by expenditure cuts and not by revenue increases.59 The economic downturn after 2011 did not cause a rethinking of fiscal priorities. Transition from high to low taxing and spending was accomplished, among other things, by a pension reform (1994/1998) that has made the pension system ‘completely independent financially from the budget. There is no longer any cross-subsidization from the public purse to the pension funds’ (ibid.: 17). In spite of the fiscal surplus, pensions were cut in 2010 and will be further cut in future, in line with expected shortfalls in revenue due to demographic change. There also was what was called the ‘tax reform of the century’ in 1990 and 1991, which contributed to the fiscal crisis of the early 1990s and helped justify the subsequent cuts in public expenditure.

Investment: A History by Norton Reamer, Jesse Downing

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Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Berlin Wall, Bernie Madoff, Brownian motion, buttonwood tree, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, Gordon Gekko, Henri Poincaré, high net worth, index fund, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, margin call, means of production, Menlo Park, merger arbitrage, moral hazard, mortgage debt, Network effects, new economy, Nick Leeson, Own Your Own Home, pension reform, Ponzi scheme, price mechanism, principal–agent problem, profit maximization, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, Sand Hill Road, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, technology bubble, The Wealth of Nations by Adam Smith, time value of money, too big to fail, transaction costs, underbanked, Vanguard fund, working poor, yield curve

The media picked up the issue as well; an NBC Reports special that aired in 1972 called “Pensions: The Broken Promise” received abundant press and was viewed widely across the country, spotlighting the issue during a divisive congressional battle over pensions.30 Together, these events and the ensuing media coverage helped garner political support for pension reform. Given their involvement in the early pension problems, the United Auto Workers (UAW) had an interesting position on the subject of pension reform. On the one hand, the UAW did not, of course, want to see labor suffer when firms were facing dire financial straits. On the other, because it had often pushed for retroactive increases in pension benefits, it did not necessarily want to require full funding of plans at all times because that would increase the push back against the UAW’s negotiation of more pension benefits, since the firm would be required to make an immediate cash outlay to meet the liability after new benefits were set.31 The thrust of the UAW’s push for reforms was to establish pension reinsurance more than it was to create requirements for fully funded pension plans. 112 Investment: A History Congress responded with efforts from a variety of committees.


pages: 537 words: 144,318

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money by Steven Drobny

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Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, business process, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, Commodity Super-Cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, family office, fiat currency, fixed income, follow your passion, full employment, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, invisible hand, London Interbank Offered Rate, Long Term Capital Management, market bubble, market fundamentalism, market microstructure, moral hazard, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, purchasing power parity, quantitative easing, random walk, reserve currency, risk tolerance, risk-adjusted returns, risk/return, savings glut, Sharpe ratio, short selling, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, The Great Moderation, time value of money, too big to fail, transaction costs, unbiased observer, value at risk, Vanguard fund, yield curve

During the 2008-2009 fiscal year, the pension fund lost 31 percent, prompting officials to claim that they would never be able to meet liabilities. Because of the inherent complexity and subjectivity associated with calculating the funding levels for pension funds, the true costs are often disguised in the near-term (see box on page 7). The shortfall associated with underfunded pensions can be made up by either investment performance or pension reform (i.e., changing the structure of the pension in some way). Yet pension reform amounts to fiscal tightening at a time when the global economy is weak and personal budgets are stretched. At the same time, these decisions are made by politicians, whose tenure in office does not compel them to make difficult, long-term decisions. Because voters do not opt for more tax or less benefits, the problems are often ignored, growing bigger by the day.


pages: 180 words: 61,340

Boomerang: Travels in the New Third World by Michael Lewis

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Berlin Wall, Bernie Madoff, Carmen Reinhart, Celtic Tiger, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, fiat currency, full employment, German hyperinflation, Irish property bubble, Kenneth Rogoff, offshore financial centre, pension reform, Ponzi scheme, Ronald Reagan, Ronald Reagan: Tear down this wall, South Sea Bubble, tulip mania, women in the workforce

Two years into his tenure, in mid-2005, he’d tried everything he could think of to persuade individual California state legislators to vote against the short-term desires of their constituents for the greater long-term good of all. “To me there were shocking moments,” he says. Having sped past a DO NOT ENTER sign, we are now flying through intersections without pausing. I can’t help but notice that, if we weren’t breaking the law by going the wrong way down a one-way street, we’d be breaking the law by running stop signs. “When you want to do pension reform for the prison guards,” he says, “and all of a sudden the Republicans are all lined up against you. It was really incredible and it happened over and over: people would say to me, ‘Yes, this is the best idea! I would love to vote for it! But if I vote for it some interest group is going to be angry with me, so I won’t do it.’ I couldn’t believe people could actually say that. You have soldiers dying in Iraq and Afghanistan, and they didn’t want to risk their political lives by doing the right thing.”


pages: 219 words: 65,532

The Numbers Game: The Commonsense Guide to Understanding Numbers in the News, in Politics, and inLife by Michael Blastland; Andrew Dilnot

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Atul Gawande, business climate, correlation does not imply causation, credit crunch, happiness index / gross national happiness, pension reform, pensions crisis, randomized controlled trial, school choice, very high income

The fault here is not with numbers and the inevitable way that they must bully reality into some semblance of orderliness. It is with people, and our tendency to ignore that this compromise took place, while leaping to big conclusions. Is this a mere tabloid extravagance? Not at all: it is commonplace, in policymaking circles as in the media. When, amid fears of a pension crisis, the British government- appointed Turner Commission published a preliminary report in 2005 on the dry business of pension reform, it said 40 percent of the population was heading for “inadequate” provision in retirement. With luck, your definitional muscles will now be flexing: what do they mean by “inadequate”? In reaching that 40 percent figure—a shocking one—the Commission had said each to their own resources: either you have a pension or you don’t, a hard-and-fast definition like the interpretation in the yob survey of the law on assault, in or out but nothing in between, covered or not, according to your own and only your own finances.


pages: 225 words: 11,355

Financial Market Meltdown: Everything You Need to Know to Understand and Survive the Global Credit Crisis by Kevin Mellyn

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asset-backed security, bank run, banking crisis, Bernie Madoff, bonus culture, Bretton Woods, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, disintermediation, diversification, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, global reserve currency, Home mortgage interest deduction, Isaac Newton, joint-stock company, liquidity trap, London Interbank Offered Rate, margin call, market clearing, moral hazard, mortgage tax deduction, Northern Rock, offshore financial centre, paradox of thrift, pattern recognition, pension reform, pets.com, Plutocrats, plutocrats, Ponzi scheme, profit maximization, pushing on a string, reserve currency, risk tolerance, risk-adjusted returns, road to serfdom, Ronald Reagan, shareholder value, Silicon Valley, South Sea Bubble, statistical model, The Great Moderation, the payments system, too big to fail, value at risk, very high income, War on Poverty, Y2K, yield curve

CAPITAL MARKETS TAKE OVER The same decade that saw the banking industry enter its perfect storm saw the beginning of the longest bull market in Wall Street history. The 25-year bull market that ended in 2008 coincides with a vast increase in pension fund assets under professional management. Some of this merely reflects demography as the Baby Boomers began to accumulate wealth. The Employee Retirement Income Security Act (ERISA) pension reforms of 1974 and the implementation of tax The Natural History of Financial Folly deferred personal pension plans, 401(k)s, in 1981 were key factors. The 1982 bipartisan commission on Social Security chaired by Alan Greenspan and Daniel Patrick Moynihan led Congress to raise payroll taxes and retirement ages in 1984, but the need for personal retirement savings became widely recognized. At the same time, corporations were anxious to shift the burden of retirement plans on to their employees. 401(k) plans are defined contribution schemes in which the plan sponsor is not responsible for providing a specified future benefit like a traditional pension.

Unhappy Union by The Economist, La Guardia, Anton, Peet, John

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bank run, banking crisis, Berlin Wall, Bretton Woods, capital controls, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, debt deflation, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, Flash crash, illegal immigration, labour market flexibility, labour mobility, market fundamentalism, moral hazard, Northern Rock, oil shock, open economy, pension reform, price stability, quantitative easing, special drawing rights, supply-chain management, The Great Moderation, too big to fail, transaction costs, éminence grise

Indeed, in their first encounter with the European semester, several national leaders, even those normally thought of as pro-European, went out of their way to criticise the Commission for its intrusiveness. Spain’s Mariano Rajoy announced in 2012 that it was for his government, not the Commission, to decide the right level of the Spanish budget deficit. In France, Hollande early on declared that, while the Commission was within its rights to demand pension reform, his government should be left to decide what sort of changes to make and how quickly to make them. The Italian government rejected a criticism of its longer-term debt sustainability. And when Belgium, the most pro-European country of all, was rebuked over its budget deficit, one Belgian government minister asked aloud: “Who is Olli Rehn?” (the economic-affairs commissioner).5 Yet it is too simple to see the problem as merely one of excessive Commission interference in matters better left to elected national governments.


pages: 317 words: 101,475

Chavs: The Demonization of the Working Class by Owen Jones

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Asperger Syndrome, banking crisis, Berlin Wall, British Empire, call centre, collapse of Lehman Brothers, credit crunch, deindustrialization, Etonian, facts on the ground, falling living standards, first-past-the-post, ghettoisation, Gini coefficient, hiring and firing, housing crisis, Hugh Fearnley-Whittingstall, illegal immigration, income inequality, informal economy, low skilled workers, low-wage service sector, Occupy movement, pension reform, place-making, Plutocrats, plutocrats, race to the bottom, rising living standards, The Bell Curve by Richard Herrnstein and Charles Murray, The Spirit Level, too big to fail, unpaid internship, upwardly mobile, We are the 99%, Winter of Discontent, women in the workforce, working-age population

Itwas the biggest workers' protest for over a generation. Here was a cross-section of the modern British working class, hundreds of thousands strong, standing up to a government that was forcing them to pay for a crisis they had no role in causing. The protest marked the beginning of a new wave of trade-union resistance. After assuming office, the Conservative-led government announced so-called reforms to public sector pensions-'reforms' being a term that had long since changed in meaning from 'social progress' to 'rolling it back'. Arguing that public sector pensions were becoming unaffordable, the government unveiled plans to make workers pay more and work longer for their pensions and receive less. Yet a recently commissioned Government report written by ultraBlairite ex-Labour Minister John Hutton revealed that public sector pensions would fall as a proportion of Britain's economy: in other words, they were set to become more affordable.


pages: 339 words: 105,938

The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

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airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, new economy, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, trade liberalization, ultimatum game

A large body of psychological research suggests that these preoccupations are associated with increased rates of mental illness, including depression, substance abuse, anxiety and personality disorder.4 Less dramatically, and anecdotally, we can live in a prosperous economic environment, and still discover that modern life is rubbish. So how can a better understanding of economics help? Talk of improving quality of life might provoke expectations that the following chapters include detailed discussions of integrated transport policies, pension reforms and endogenous growth theory. In other words, the kind of policy wonkery which few of us care passionately about. But we do care about the principles at stake - whether it is fair to tax the rich more highly, whether environmental damage can be boiled down to a sum of money, whether surveys can really measure our quality of life or happiness. This book is about these principles. Black box economics obscures them.


pages: 375 words: 105,067

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry by Helaine Olen

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asset allocation, Bernie Madoff, Cass Sunstein, Credit Default Swap, David Brooks, delayed gratification, diversification, diversified portfolio, Donald Trump, Elliott wave, en.wikipedia.org, estate planning, financial innovation, Flash crash, game design, greed is good, high net worth, impulse control, income inequality, index fund, London Whale, Mark Zuckerberg, mortgage debt, oil shock, payday loans, pension reform, Ponzi scheme, quantitative easing, Ralph Nader, RAND corporation, random walk, Richard Thaler, Ronald Reagan, Saturday Night Live, too big to fail, transaction costs, Unsafe at Any Speed, upwardly mobile, Vanguard fund, wage slave, women in the workforce, working poor, éminence grise

She has since taken her idea to the states, where, she said, the influence of the mutual fund industry is less strong than in Washington. She advocates opening up the state pension systems to private workers, a proposal recently endorsed by both New York City comptroller John Liu and California state treasurer Bill Lockyer. “What I’m thinking is that it would be a very smart political and policy move by those who want to keep defined-benefit public pensions to link the move for pension reform to a demand for a meaningful retirement-security option for California private sector workers like the one proposed by Dr. Ghilarducci,” Lockyer said in a recent speech. The interest of state government officials points to the real reason Ghilarducci is viewed as the wicked witch by more than a few in the financial services industry. The Guaranteed Retirement Accounts could bring new players into the general retirement industry, new players like the state pension funds and the institutional and hedge funds they invest their money in, players with power to challenge the stranglehold the mutual fund industry and other retail-investment arms currently have over our retirement savings via the 401(k), an instrument that serves their bottom line more than the ones of the workers it is supposed to be benefitting.

Crisis and Dollarization in Ecuador: Stability, Growth, and Social Equity by Paul Ely Beckerman, Andrés Solimano

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banking crisis, banks create money, barriers to entry, capital controls, Carmen Reinhart, carried interest, central bank independence, centre right, clean water, currency peg, declining real wages, disintermediation, financial intermediation, floating exchange rates, Gini coefficient, income inequality, income per capita, labor-force participation, land reform, London Interbank Offered Rate, Mexican peso crisis / tequila crisis, microcredit, money: store of value / unit of account / medium of exchange, offshore financial centre, open economy, pension reform, price stability, rent-seeking, school vouchers, seigniorage, trade liberalization, women in the workforce

Reduced oil revenue and the need to increase public expenditure on account of El Niño, together with the inflexibility of public expenditure, combined to increase the public deficit. The authorities simply could not reprogram expenditure sufficiently in response to their changed priorities. Three additional aspects of Ecuador’s public-sector structural-reform agenda go beyond the government budget narrowly defined. These are (a) the need for pension reform, (b) the issue of political and administrative decentralization, and (c) the lagging privatization of publicly owned assets. Like many of South America’s older national pension systems, Ecuador’s pay-as-you-go social-security system has become financially unviable, and a fundamental reform, like those of Chile, Bolivia, Argentina, and Peru, is clearly necessary. Since the mid-1980s, in addition to contributions for its own staff, the central government has been providing a subsidy to the IESS (the Instituto Ecuatoriano de Seguro Social, that is, the Ecuadoran Social Security Institute) covering 40 percent of pension payments due as well as certain specific pension deficits, including those of the national police and armed forces.


pages: 322 words: 84,752

Pax Technica: How the Internet of Things May Set Us Free or Lock Us Up by Philip N. Howard

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Affordable Care Act / Obamacare, Berlin Wall, bitcoin, blood diamonds, Bretton Woods, Brian Krebs, British Empire, call centre, Chelsea Manning, citizen journalism, clean water, cloud computing, corporate social responsibility, crowdsourcing, Edward Snowden, en.wikipedia.org, failed state, Fall of the Berlin Wall, feminist movement, Filter Bubble, Firefox, Francis Fukuyama: the end of history, Google Earth, Howard Rheingold, income inequality, informal economy, Internet of things, Julian Assange, Kibera, Kickstarter, land reform, M-Pesa, Marshall McLuhan, megacity, Mikhail Gorbachev, mobile money, Mohammed Bouazizi, national security letter, Network effects, obamacare, Occupy movement, packet switching, pension reform, prediction markets, sentiment analysis, Silicon Valley, Skype, spectrum auction, statistical model, Stuxnet, trade route, uranium enrichment, WikiLeaks, zero day

In fact, research shows that digital activism, when it leads to street protests, is usually nonviolent.12 Strange protests like the one I attended don’t happen just in Azerbaijan. They aren’t all as abstract as the ones in Minsk.13 They happen in Havana. In the final days of Burma’s military junta, they happened there, too. What is common is a rising level of innovation in protest strategy. Russia’s Pussy Riot does aggressive culture jamming. In Ukraine, the Femen network of young women bare their breasts in public but then talk about pension reform. The Russian art collective Voina painted a two hundred–foot penis on a Saint Petersburg drawbridge to protest heightened security. Ukrainian activists launched a Kickstarter campaign to buy themselves a “people’s drone” that would let them watch Russian troop movements in their country.14 The internet of things is putting tough regimes into digital dilemmas on a regular basis, because leaders have to choose between two equally distasteful actions.


pages: 391 words: 102,301

Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

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Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, global reserve currency, greed is good, Hernando de Soto, illegal immigration, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, offshore financial centre, open borders, open economy, Peace of Westphalia, peak oil, pension reform, Plutocrats, plutocrats, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, trickle-down economics, Washington Consensus, Winter of Discontent

The Harvard historian Niall Ferguson argues, “Thatcher and Reagan came later. The backlash against welfare started in Chile.”8 Awkwardly for those who like to believe that political and economic freedom are indivisible, the Chilean reforms were launched after a military coup that overthrew the leftist government of Salvador Allende in 1973. Chile’s policies of slashing tariffs and taxes, inflation fighting, privatization, and pension reform were regarded as a model by free-market reformers around the world. But they took place against a background of the imprisonment, torture, and murder of dissidents. General Pinochet’s embrace of the market and assault on inflation came in 1975, after a visit by Milton Friedman, the doyen of the Chicago school of economists, who was to receive the Nobel Prize for economics the following year.


words: 49,604

The Weightless World: Strategies for Managing the Digital Economy by Diane Coyle

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barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, clean water, computer age, Corn Laws, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, full employment, global village, hiring and firing, Howard Rheingold, income inequality, informal economy, invisible hand, Jane Jacobs, Joseph Schumpeter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Marshall McLuhan, McJob, microcredit, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pensions crisis, Ronald Reagan, Silicon Valley, spinning jenny, The Death and Life of Great American Cities, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

His scheme ‘should be viewed as the first, hopefully, of a number of schemes where social and individual efforts are collectivised in a manner acceptable to voters’. Collectivised or not, it also manifests self-help philosophy in a way that is equally acceptable to right-wing politicians. All that remains is for political leaders to sell this idea to the voters. In individualist Britain and America it should not be difficult. In continental Europe the task looks likely to be much harder, despite the greater urgency of pension reform. Most Europeans see pensions as falling firmly within the domain of the state although they would probably not vote for the tax increases necessary to close their pensions deficit. Such is the passion about state provision of pensions that German, Italian and French citizens have demonstrated on the streets to defend it. Indeed, two million German civil servants marched in protest at the suggestion that they should merely start to contribute directly to their own pensions for the first time, foregoing 0.2 per cent of their annual wage increase from the year 2001.


pages: 441 words: 136,954

That Used to Be Us by Thomas L. Friedman, Michael Mandelbaum

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3D printing, Affordable Care Act / Obamacare, Albert Einstein, Amazon Web Services, American Society of Civil Engineers: Report Card, Andy Kessler, Ayatollah Khomeini, bank run, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business process, call centre, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, Climatic Research Unit, cloud computing, collective bargaining, corporate social responsibility, Credit Default Swap, crowdsourcing, delayed gratification, energy security, Fall of the Berlin Wall, fear of failure, full employment, Google Earth, illegal immigration, immigration reform, income inequality, job automation, Kenneth Rogoff, knowledge economy, Lean Startup, low skilled workers, Mark Zuckerberg, market design, more computing power than Apollo, Network effects, obamacare, oil shock, pension reform, Report Card for America’s Infrastructure, rising living standards, Ronald Reagan, Rosa Parks, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, the scientific method, Thomas L Friedman, too big to fail, University of East Anglia, WikiLeaks

So between 2001 and 2009, Atlanta’s unfunded defined-pension obligation grew from $321 million to $1.484 billion. Reed couldn’t cut existing pensions without lawsuits, but he reduced pensions for all new employees to pre-2000 levels and raised the vesting period from ten to fifteen years. When union members picketed city hall, Reed invited them all into his office—in shifts—and patiently explained, with charts and spreadsheets, that without pension reform everyone’s pensions would eventually go bust. By getting the city’s budget under control, Reed then had some money to invest in more police and, what he wanted most, to reopen the sixteen recreation centers and swimming pools in the city’s most disadvantaged neighborhoods, which had been shuttered for lack of funds. “People were shooting dice in the empty pools,” he said. Local businesses have since funded some after-school job-skills programs in the reopened centers.


pages: 586 words: 159,901

Wall Street: How It Works And for Whom by Doug Henwood

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accounting loophole / creative accounting, affirmative action, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, capital asset pricing model, capital controls, central bank independence, corporate governance, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, interest rate swap, Internet Archive, invisible hand, Isaac Newton, joint-stock company, Joseph Schumpeter, kremlinology, labor-force participation, late capitalism, law of one price, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, Louis Bachelier, market bubble, Mexican peso crisis / tequila crisis, microcredit, minimum wage unemployment, moral hazard, mortgage debt, mortgage tax deduction, oil shock, payday loans, pension reform, Plutocrats, plutocrats, price mechanism, price stability, prisoner's dilemma, profit maximization, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Robert Shiller, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

"The Equity Premium: Stock and Bond Returns Since 1802," Financial Analysts Journal (February), pp. 28-38. Simmel, Georg (1978). The Philosophy of Money (Boston: Beacon Press). Simmons, Jacqueline (1996). "Home Prices Soar in Unexpected Places," Wall Street Journal, February 13- Simons, Katerina, and Stephen Cross (1991). "Do Capital Markets Predict Problems in Large Commercial Banks?," New England Economic Review (May-June}, pp. 51-56. Singh, Ajit (1995). "Pension Reform, the Stock Market, Capital Formation, and Economic Growth; A Critical Commentary on the World Bank's Proposals," mimeo, Cambridge University, Economics Department (December). Sloan, Allan (1994). "KKR Deal Makes a Silk Purse Out of a Cow's Ear," New York Newsday, September 18, p. A86. Smith, Adam (1976). An Inquiry Into the Nature and Causes of the Wealth of Nations, edited by R.H. Campbell and A.S.


pages: 475 words: 155,554

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge by Faisal Islam

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Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, British Empire, capital controls, carbon footprint, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, crony capitalism, dark matter, deindustrialization, Deng Xiaoping, disintermediation, energy security, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, financial repression, floating exchange rates, forensic accounting, forward guidance, full employment, ghettoisation, global rebalancing, global reserve currency, hiring and firing, inflation targeting, Irish property bubble, Just-in-time delivery, labour market flexibility, London Whale, Long Term Capital Management, margin call, market clearing, megacity, Mikhail Gorbachev, mini-job, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, North Sea oil, Northern Rock, offshore financial centre, open economy, paradox of thrift, pension reform, price mechanism, price stability, profit motive, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, reshoring, rising living standards, Ronald Reagan, savings glut, shareholder value, sovereign wealth fund, The Chicago School, the payments system, too big to fail, trade route, transaction costs, two tier labour market, unorthodox policies, uranium enrichment, urban planning, value at risk, working-age population

Of course we want to live better and not be too frugal.’ The building of social security systems in China and other emerging economies is one of the great challenges for the world economy. Few leaders in these countries are much impressed by the European welfare system. But they will have to provide. What would a Chinese National Health Service look like? Part of the spike in Chinese savings rates can be dated back to a pension reform that severely limited retirement payouts to state workers. Financial markets will need to develop to help the Chinese masses save and smooth their incomes over time. In China, however, the experts refute the notion that high savings really are the problem. The flipside of the ‘savings glut’ in China that America complains about is the ‘investment famine’ in the rest of the world that China is only too keen to point out.


pages: 515 words: 142,354

The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

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bank run, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bretton Woods, capital controls, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, investor state dispute settlement, invisible hand, Kenneth Rogoff, knowledge economy, labour market flexibility, labour mobility, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

The worry is that attempts to regulate, to prevent such abuses, will now become a cross-border dispute, with the German government (and therefore the Troika) taking the side of the oligarch/German partnership against the public interest. 31 In the case of Greece, the historically tense relationship with Turkey makes cutbacks in military spending especially difficult, even though when Georges Papandreou was foreign minister, there was a serious rapprochement. 32 See John Henley, “ ‘Making Us Poorer Won’t Save Greece’: How Pension Crisis is Hurting Its People,” Guardian, June 17, 2015. 33 Matthew Dalton, “Greece’s Pension System Isn’t That Generous After All,” Wall Street Journal, February 27, 2015. 34 Whether part of the formal or implied contract is of secondary concern. 35 There is an exception: when pensions have been gratuitously increased after the work has been done. In that case, the worker has been given a “gift,” which was not part of the contract. Reducing, or even eliminating, the gift, in the presence of extreme budgetary stringency, may then make sense. 36 In February 2014. 37 There are other anomalous aspects of the demands for pension reform. Part of the problem that the pension system finds itself in is because it held Greek government bonds, which experienced significant write-downs as part of debt restructuring. Had the restructuring been done earlier (in 2010) and had the Troika not imposed such contractionary policies, the size of the write-downs would have been markedly less. Thus, the Troika itself is partly to blame for the problems in the pension system. 38 As we noted earlier in the book, part of what was going on was a hidden recapitalization of the banking system. 39 According to OECD data on long-term interest rates (rates for government bonds with 10-year maturity). 40 Whether the ECB would be willing and able to do whatever it takes when put to the test has been put into question by the constant haggling with its German board members—for example, over whether buying the bonds of a country in crisis is desirable, or even permissible. 41 Moreover, the bailout provides an opportunity for the short-term private creditors to take out their funds, leaving an even greater burden on the rest. 42 There are a few exceptions, which are worth noting.


pages: 387 words: 120,155

Inside the Nudge Unit: How Small Changes Can Make a Big Difference by David Halpern

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Affordable Care Act / Obamacare, availability heuristic, carbon footprint, Cass Sunstein, centre right, choice architecture, cognitive dissonance, collaborative consumption, correlation does not imply causation, Daniel Kahneman / Amos Tversky, endowment effect, happiness index / gross national happiness, hindsight bias, illegal immigration, job satisfaction, Kickstarter, libertarian paternalism, market design, meta analysis, meta-analysis, Milgram experiment, nudge unit, peer-to-peer lending, pension reform, presumed consent, quantitative easing, randomized controlled trial, Richard Feynman, Richard Thaler, Ronald Reagan, Rory Sutherland, Simon Kuznets, skunkworks, the built environment, theory of mind, traffic fines, World Values Survey

Another came from the most famous example from our book – an image of a housefly etched near the drain in the urinals at Amsterdam’s Schipol airport which reportedly reduced ‘spillage’ by 80 percent – this was considered to be as good as it would get when it came to nudging. The other main criticism came from the political left, who worried that the Tories would use nudging as an excuse for avoiding tougher, presumably more effective policies. Fortunately, neither of these criticisms turned out to be well-founded. A good example of the potential power of a gentle nudge is the pension reforms that in 2010 were being prepared for a roll-out in Britain under a plan devised by Lord Adair Turner. Under the plan, employers were required to automatically enrol workers into the plan, but employees were free to opt out if they wished to do so. Left-leaning sceptics thought that participation should be mandatory, and that the mere nudge provided by automatic enrolment would not suffice. These fears turned out to be misplaced.


pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

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Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, invisible hand, Isaac Newton, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, New Journalism, Nikolai Kondratiev, Paul Lévy, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, South Sea Bubble, statistical model, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, value at risk, Vanguard fund, volatility smile, Yogi Berra

In this view it wasn’t the riskiness of an individual stock or bond that mattered, but the way it fit in to a portfolio. By the mid-1970s, this approach had a name—modern portfolio theory—and was beginning to make slight inroads in the institutional investing world. Then Washington gave it a huge boost. In the wake of several corporate bankruptcies that left pensions unpaid, Congress passed pension-reform legislation in 1974. The Employee Retirement Security Act has since gone on to have many interesting consequences. The first had to do with the standard of prudence laid down by the law and in subsequent regulations from the Department of Labor. No longer a legal concept based on tradition, prudence was redefined to mean following the scientific dictates of modern portfolio theory.8 IN THIS ACCOUNTING, RISK CEASED to be a vague, unquantifiable menace that could be tamed only with judgment.


pages: 859 words: 204,092

When China Rules the World: The End of the Western World and the Rise of the Middle Kingdom by Martin Jacques

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Admiral Zheng, Asian financial crisis, Berlin Wall, Bretton Woods, BRICs, British Empire, credit crunch, Dava Sobel, deindustrialization, Deng Xiaoping, deskilling, discovery of the americas, Doha Development Round, energy security, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global reserve currency, global supply chain, illegal immigration, income per capita, invention of gunpowder, James Watt: steam engine, joint-stock company, Kenneth Rogoff, land reform, land tenure, Malacca Straits, Martin Wolf, Naomi Klein, new economy, New Urbanism, open economy, pension reform, price stability, purchasing power parity, reserve currency, rising living standards, Ronald Reagan, Scramble for Africa, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, spinning jenny, Spread Networks laid a new fibre optics cable between New York and Chicago, the scientific method, Thomas L Friedman, trade liberalization, urban planning, Washington Consensus, Xiaogang Anhui farmers

(London: Demos, 2007) Wilson, Dominic, and Anna Stupnytska, ‘The N-11: More Than an Acronym’, Goldman Sachs Global Economics Papers, 153 (28 March 2007) ——and Roopa Purushothaman, ‘Dreaming with BRICs: The Path to 2050’, Goldman Sachs Global Economics Papers, 99 (2003) Wolf, Martin, ‘The Brave New World of State Capitalism’, Financial Times, 16 October 2007 ——‘Life in a Tough World of High Commodity Prices’, Financial Times, 4 March 2008 ——‘Why Agreeing a New Bretton Woods is Vital’, Financial Times, 4 November 2008 ——‘Why America and China Cannot Afford to Fall Out’, Financial Times, 8 October 2003 ——Why Globalization Works (New Haven: Yale University Press, 2005) Wolferen, Karel van, The Enigma of Japanese Power: People and Politics in a Stateless Nation (New York: Vintage, 1990) Wong, Herman, ‘On Global Catwalks, a New Face That’s Hot - Asian’, China Daily, 24 May 2006 Wood, Frances, No Dogs and Not Many Chinese (London: John Murray, 1998) Woodall, Pam, ‘The New Titans’, survey, The Economist, 16 September 2006 Wooldridge, Adrian, ‘After Bush: A Special Report on America and the World’, The Economist, 29 March 2008, p. 10 World Bank, At China’s Table: Food Security Options (Washington, DC: 1997) ——China Engaged: Integration with the Global Economy (Washington, DC: 1997) ——Clear Water, Blue Skies: China’s Environment in the New Century (Washington, DC: 1997) ——The East Asian Miracle: Economic Growth and Public Policy (Washington, DC: Oxford University Press, 1993) ——Financing Health Care: Issues and Options for China (Washington, DC:1997) ——Old Age Security: Pension Reform in China (Washington, DC:1997) ——Sharing Rising Incomes: Disparities in China (Washington, DC:1997) ——‘Will Resilience Overcome Risk? East Asia Regional Outlook’, November 2007, posted on www.worldbank.org Wu, David Y. H., and Sidney C. H. Cheung, eds, The Globalization of Chinese Food (London: RoutledgeCurzon, 2002) Xie, Andy, Asia/Pacific Economics, report for Morgan Stanley, November 2002 Xinran, What the Chinese Don’t Eat (London: Vintage Books, 2006) Xu, Gary Gang, Sinascape: Contemporary Chinese Cinema (Oxford: Rowman and Littlefield, 2007) Yahuda, Michael, ‘The Evolving Asian Order: The Accommodation of Rising Chinese Power’, in David Shambaugh, ed., Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005) ——Hong Kong: China’s Challenge (London: Routledge, 1996) Yan Xuetong, ‘The Rise of China in Chinese Eyes’, Journal of Contemporary China, 10:26 (2001) Yardley, Jim, ‘After the Fury in Tibet, Firm Hand Trembles’, International Herald Tribune, 18 March 2008 ——‘China Offers Defense of Its Darfur Stance’, International Herald Tribune, 8-9 March 2008 ——and Somini Sengupta, ‘Beijing Blames the Dalai Lama’, International Herald Tribune, 19 March 2008 Yoshino, Kosaku, Cultural Nationalism in Contemporary Japan (London: Routledge, 1992) Yu Bin, ‘China and Russia: Normalizing Their Strategic Partnership’, in David Shambaugh, ed., Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005) Yu Yongding, ‘China’s Macroeconomic Development, Exchange Rate Policy and Global Imbalances’, unpublished paper, Asahi Shimbun Symposium, October 2005 ——‘China’s Rise, Twin Surplus and the Change of China’s Development Strategy’, unpublished paper, Namura Tokyo Club Conference, Kyoto, 21 November 2005 ——‘China’s Structural Adjustment’, unpublished paper, Seoul Conference, 2005 ——‘The Interactions Between China and the World Economy’, unpublished paper, Nikkei Simbon Symposium, 5 April 2005 ——‘Opinions on Structure Reform and Exchange Rate Regimes Against the Backdrop of the Asian Financial Crisis’, unpublished paper, Japanese Ministry of Finance, 2000 Zakaria, Fareed, The Post-American World (London: Allen Lane, 2008) Zha Daojiong, ‘China’s Energy Security and Its International Relations’, China and Eurasia Forum Quarterly, 3:3 (2005) Zhang, Peter G., IMF and the Asian Financial Crisis (Singapore: World Scientific, 1998) Zhang Wei-Wei, ‘The Allure of the Chinese Model’, International Herald Tribune, 1 November 2006 Zhang Yunling, ed., Designing East Asian FTA: Rationale and Feasibility (Beijing: Social Sciences Academic Press, 2006) ——East Asian Regionalism and China (Beijing: World Affairs Press, 2005) ——and Tang Shiping, ‘China’s Regional Strategy’, in David Shambaugh, ed., Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005) Zhao Suisheng, ed., Chinese Foreign Policy: Pragmatism and Strategic Behavior (New York: M.


pages: 613 words: 200,826

Unreal Estate: Money, Ambition, and the Lust for Land in Los Angeles by Michael Gross

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Albert Einstein, Ayatollah Khomeini, bank run, Bernie Madoff, California gold rush, clean water, Donald Trump, estate planning, family office, financial independence, Maui Hawaii, McMansion, mortgage debt, offshore financial centre, oil rush, passive investing, pension reform, Ponzi scheme, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Steve Wozniak, The Predators' Ball, transcontinental railway

Soon he was under investigation by the Los Angeles–based Organized Crime Task Force. Simultaneously, the Nevada Gaming Commission was investigating the man who actually ran the Stardust for the mob, Frank “Lefty” Rosenthal (aka “Ace” Rothstein, played by Robert De Niro in the Scorsese movie). Next, the Labor Department piled on, asking whether the Teamster loans to Glick violated a brand-new pension reform law implemented to curb abuses like those that had already plagued Beverly Ridge. Then, Nevada charged Glick with failing to report loans to his casinos. Finally, Glick’s name surfaced in the investigation of the gangland-style execution of Tamara Rand, a fifty-four-year-old San Diego businesswoman whose safe deposit box was stuffed with $400,000 in crisp new currency. A former consultant to one of Glick’s companies, she’d sued him a year before her death after he allegedly refused to give her 5 percent of his gambling shares in return for more than a million dollars she’d loaned him.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

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accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, German hyperinflation, Gini coefficient, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, market bubble, means of production, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, pension reform, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, The Nature of the Firm, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, very high income, We are the 99%

There are many others, however, who began work early and whose work is arduous or not very rewarding and who legitimately aspire to retire relatively early (especially since their life expectancy is often lower than that of more highly qualified workers). Unfortunately, recent reforms in many developed countries fail to distinguish adequately between these different types of individual, and in some cases more is demanded of the latter than of the former, which is why these reforms sometimes provoke strong opposition. One of the main difficulties of pension reform is that the systems one is trying to reform are extremely complex, with different rules for civil servants, private sector workers, and nonworkers. For a person who has worked in different types of jobs over the course of a lifetime, which is increasingly common in the younger generations, it is sometimes difficult to know which rules apply. That such complexity exists is not surprising: today’s pension systems were in many cases built in stages, as existing schemes were extended to new social groups and occupations from the nineteenth century on.

France (Lonely Planet, 8th Edition) by Nicola Williams

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active transport: walking or cycling, back-to-the-land, bike sharing scheme, British Empire, car-free, carbon footprint, centre right, Columbine, double helix, Guggenheim Bilbao, haute couture, haute cuisine, Henri Poincaré, Honoré de Balzac, illegal immigration, industrial robot, information trail, Jacquard loom, Jacquard loom, Joseph-Marie Jacquard, Louis Blériot, Louis Pasteur, low cost carrier, Mahatma Gandhi, means of production, Murano, Venice glass, pension reform, QWERTY keyboard, ride hailing / ride sharing, Saturday Night Live, Silicon Valley, Skype, supervolcano, trade route, urban renewal, urban sprawl, V2 rocket

A few months later, in a bid to appease a discontented electorate, parliament granted greater power to local government Click here on economic and cultural affairs, transport and further education. The constitutional reform also gave the green light to local referenda – to better hear what the people on the street were saying (though the first referendum subsequently held – in Corsica – threw up a ‘No’ vote, putting Paris back at square one; for details Click here). Spring 2003 ushered in yet more national strikes, this time over the government’s proposed pension reform, which was pushed through parliament in July. ‘We are not going to be intimidated by protestors’ was the tough response of centre-right Prime Minister Jean-Pierre Raffarin, in office since May 2002. An extreme heatwave that summer, sending temperatures in the capital soaring above 40° and claiming 11,000 predominantly elderly lives, did little to cool rising temperatures. * * * SUITE FRANÇAISE The story behind literary stunner Suite Française is as incredible as the novel itself.